Welcome back to the Monevator snug! Settle in for another interview with a reader who has achieved financial freedom (aka FIRE). This month we learn how moving to a cheaper part of the country – or geo-arbitrage – enabled Jake’s young family to live their dream.
A place by the FIRE
Hello Jake, how do you feel about taking stock of your financial life today?
It’s the first time I’ve publicly discussed our story. I’m a little nervous and excited. I’m also happy that hopefully I can give something back to the FIRE community.
How old are you?
My wife and I are both in our mid-40s. We’ve been married for 16 years.
Do you have any dependents?
Two children who are both at junior school.
Where do you live and what’s it like there?
During 2020 we relocated from the Home Counties to East Anglia.
It was a big decision and move for us, as our children had to leave their friends behind and start again at new schools. It was difficult at the time with the lockdowns and schools closing. Thankfully they’ve settled in well.
The move was a lifestyle choice. My wife and I agreed we would like a slower and more relaxed pace of life, so we could spend more time with our children. It was also part of our FIRE strategy – specifically, domestic geo-arbitrage.
Property prices and the cost of living are lower in East Anglia than in the Home Counties.
When do you consider you achieved Financial Independence (FI)?
Using the 4% rule as guidance, we reached our FI number during 2022. That’s based on living costs of between £34-35,000 a year, suggesting a required net worth of between £850-875,000.
Of course, our net worth can fluctuate by large amounts on a monthly basis. But so far, after every big dip the market has recovered enough for us to remain comfortable with our plan. We’re aware this may not always be the case.
There is also the mental side to consider. Self-doubts as to whether we have enough. The nagging feeling that we could do with a little more, and a little bit more after that.
It can be scary – even overwhelming. You question if you have made the right decisions.
How do you deal with such doubts?
We try to block out as best we can the external noise and not compare ourselves to others.
At some stage you must take action based on your circumstances. Otherwise progress will not happen, and you will continue being fearful.
We feel we are in a good place and have enough. We’ve talked about the need for us to be fluid, and adjust if required.
Did you retire when you achieved FI?
I left employment towards the end of 2022 and currently have no intention of returning. But that is not to say that I will never work again. One day I may find a part-time role that suits me.
After I discovered the FIRE community in 2017, my wife and I discussed how we wanted our future to look. I was commuting into London daily and was physically and mentally exhausted and frustrated. For a long time I had wanted out of the rat race. The discovery of the FIRE community was a glimmer of hope.
I find it strange to label myself retired. I dedicated a lot of my energy to the Financial Independence part of FIRE. The retiring early part is an option that becomes a real possibility if you wish.
I had become disillusioned with my employer. Reaching our FI number when we did in 2022 allowed me to end that relationship. It can be hard to take a step back and understand how unhealthy a work situation is for you and your family.
Assets: overweight America
What’s your net worth?
Our net worth is £874,500; additionally our house is valued at £475,000.
How is it comprised?
- Two ISA accounts (invested in S&P 500 passive index funds) £175,000
- Two ISA accounts (invested in a UK bank) £119,000
- Two taxable general trading accounts (invested in S&P 500 passive index funds) £128,000
- Three pensions (two are SIPPS invested in S&P 500 passive index funds) £441,000
- Cash and Premium Bonds £18,500
- Debt is on a credit card (charging 0%) -£7,000
- Total net worth (excluding house) £874,500
- Total net worth (including house) £1,349,500
Your allocation towards the S&P 500 jumps out…
Our investments are not as diversified as is usually encouraged in the FIRE community. It could be argued though that the bigger companies in the S&P 500 have operations worldwide. Thus a reasonable percentage of the revenue and profit is diversified.
But why not a global tracker?
It was probably partly the influence of the American FIRE blogs that I spent time reading when we started investing in passive index funds. I also wanted to avoid any more exposure to the FTSE 100 as we had our investment in the UK bank.
For some unknown reason I am not attracted to the European markets.
Through my research the S&P 500 appealed on many levels. The large global companies, the high global market share, the strict regulation, the global revenue exposure, the historical returns. I also think that the American markets have a very good reputation worldwide.
Rightly or wrongly, I arrived at the conclusion that American companies are diversified international companies with global reach. But I am not closed to the idea of a more traditional approach to diversifying. I’ve been thinking about moving some money into a global tracker in the future.
What about that single company holding?
A legacy holding built up over many years before we discovered the FIRE community. It’s a bank that pays out dividends, which we automatically re-invest.
As it’s in an ISA we don’t have to worry about the dividend allowance.
You have no mortgage…
We own our home, and it is mortgage-free due to our domestic geo-arbitrage. We sold our house in the Home counties for more than the purchase price in East Anglia.
Do you consider your home an asset, an investment, or something else?
This is a more complex question than it initially seems.
There are a lot of people who consider their home an asset. Some even refer to it as their pension. I guess the definition is in the eye of the beholder.
In my opinion it’s a mixture of all the above. It is partly an asset, as it has a value – the price that someone is willing to pay. And in our case there is no mortgage.
As an asset it is not immediately liquid. The selling process will normally take a couple of months, at least. But you can realise the value once it’s sold.
On the flip side it costs us money on a monthly basis via council tax, electricity and gas, water, broadband, and general upkeep.
We don’t include our home in our net worth when we calculate it every month.
Earning: doing it the hard way
What was your job?
I worked in the commodities industry and my wife in the fashion industry. We both had various roles in different industries over time. Neither of us had clear career paths.
What was your annual income?
When I finished at the end of 2022, it was a base salary of £68,000 plus a yearly bonus, which varied between £3-5,000.
My wife gave up work approximately eight years ago, when we had our second child. She was earning £24-25,000. We lived on a single salary after that as a family of four.
How did your career progress – and was pursuing financial independence part of your plan?
I’ve worked full-time for 24 years, but it was only for the last 12 years or so that I earned over £40,000. Before that I earned between £12-30,000.
My most important career move was when I moved within the same industry but to a different department. That increased my salary by £10,000. It was huge to us – going from £30,000 to £40,000. I’d been trying to make the move for several years, both internally and externally. But it was very competitive and my employer placed a lot of new graduates into the role I was aiming for.
Fortunately, I persevered. I found out an external company was looking for someone in the role that I wanted. Interestingly, I’d interviewed there previously. I contacted the person who interviewed me the first time. This time I was offered it. Looking back it was a pivotal point on my way to a higher income.
Intentionally pursuing FI only became our plan in 2017, so it did not affect my career.
Did you learn anything about building your career you wish you’d known earlier?
In the first half of my career, I had to be very patient regarding progressing into higher-paying roles.
I switched industries a few times – mostly for potentially higher earnings. The tradeoff I discovered was that with higher earnings came higher levels of stress and pressure. Having to deal with volatile, aggressive and sometimes untrustworthy individuals higher up in the food chain.
I struggled with this more once we became parents. I felt guilty that I was not spending as much time at home with my family. Even when I was there physically, mentally I was consumed by work.
I wondered if I should have worked for myself rather than a corporate machine. If I had my time over again, I would probably either try working for myself or be more intentional at the start of my career.
In the first ten years of my career, I had more energy, motivation, and desire. I would have been better suited to working longer hours then – to arrive at a certain level before I became a father.
Do you have any sources of income besides your main job?
No. We did raise some extra cash to invest by de-cluttering our home and selling unwanted items online. Almost £2,000 after costs.
Did pursuing FIRE get in the way of your career?
It didn’t get in the way, but I was spending a lot of time thinking about it and researching.
After discovering the FIRE community, I spent months reading the different FIRE blogs. There was so much information, amazing content, and thought-provoking ideas. My head was spinning. I was in a daze, I could not stop thinking about this amazing discovery. I had found like-minded individuals, who had a similar mentality and way of thinking.
This community wanted to save and invest in an optimal way, working towards a better future – a flexible one with choices. I had been trying to do it my own way for years, with mixed success.
Saving: Automatic achievement
What is your annual spending? How has this changed?
We have tracked our expenses over many years.
Our annual spending has crept up a little. Based on our 2022 expenses – the highest we’ve had, and what we expect to maintain – we require between £34-35,000 per year.
This includes a little bit of wiggle room for price increases or an unexpected bill or two.
Do you stick to a budget?
We have a good understanding of where our money goes. We don’t have a specific monthly budget, but we’re aware of our spending habits. We will know how we are doing as the year progresses.
As a family we have never been extravagant with our spending and have always made sure that our basic needs are taken care of first. In addition, we make sure our children have opportunities to learn and enjoy different activities. We sign them up for after-school activities and trips, and pay for them to follow their interests and hobbies. They enjoy birthdays and Christmas.
We very rarely make impulsive purchases. If we decide we want something, we research prices and sometimes wait until the item is on sale or we can purchase a slightly older model.
Occasionally after waiting patiently, we decide we do not need it!
What percentage of your gross income did you save?
I didn’t track our savings rate early on. Even when I attempted to, I wasn’t sure I was doing it correctly. I was unsure whether to include my employer’s pension contribution, and the mortgage repayment after interest.
After some conflicting research, I settled on a calculation method.
I’ve had a look through some old spreadsheets, and it appears our saving rate was around 60%. I would guess even in the earlier part of my career my savings rate was approximately 50%.
Impressive. What’s your secret?
I’ve always been good at avoiding impulse purchases. Also, I automated savings and investments. These would be taken from my bank account when I received my monthly salary.
I didn’t consider that this was money available to spend. It was taken like tax.
Do you have any hints about spending less?
I believe mindset is very important when it comes to cash management. It may be you become bored or impatient easily, or you fear missing out. Try to learn to be disciplined and strategic. Put a basic budget in place. Automate, and avoid impulsive spending.
Do you have any passions, hobbies, or vices that eat up your income?
I’ve been slowing reacquainting myself with fishing. I still have a lot of equipment from my youth and I purchased a few secondhand items. So currently it’s not costing me too much.
I hope to find some new interests now I have more time. But surprisingly so far it hasn’t felt like I have had much! Our days are still structured around the school runs.
Investing: pick up a pension
What kind of investor are you?
Originally I was an active investor through individual companies and active funds. There was not a great deal of transparency regarding the fees. I was not aware of passive index investing.
Now most of our investments are in index funds. We are still invest in the one individual company, but have not made any additional purchases for years (except for the dividend re-investment).
What was your best investment?
One oil company share I made a profit of £9,000 on years ago. I am not sure I could classify it as an investment as it was short-term. I didn’t have a well thought out investment strategy back then.
My investments in my pension have probably been my best long-term decision. Especially when you consider the employer contributions, the tax relief, and the years of compounding still to come.
Did you make any big mistakes on your investing journey?
My biggest and most costly mistakes were investing in individual companies.
At the beginning I was influenced by day traders and the potential profit that could be made quickly. I read article after article about oil companies. The money they could make, the new discoveries of oil fields all over the world, and the expected oil reserves each field could contain.
Even though I made a profit out of one, I lost a lot more on the other companies I invested in. It taught me a valuable and expensive lesson.
I always remember losses much more than any profits!
What has been your overall return?
I didn’t track or record percentage returns. I have partial records that I have pieced together from the first part of my investing journey. I made a profit on my active managed funds that were in an ISA, but losses on most of the individual companies. I calculate I made an overall loss during this period of around £10,000.
At the same time, I also had money in premium bonds and savings accounts, I had started paying into a pension, and we had taken out our first mortgage – which we overpaid on each month.
Did you fill your ISA and pension contributions?
I’ve invested in ISAs since early in my career. Most years I was not able to use the full allowance. We also sold a large portion of our ISA investments to help with an earlier house deposit.
In the last few years we have used our full allowances. Our domestic geo-arbitrage house move enabled us to do this with the money that was left over. The rest is in our taxable trading accounts.
In my first few roles I didn’t have a pension, so I didn’t start as early as I should have. But over the last 15 years I have invested heavily in my pension.
I couldn’t contribute the full allowance of £40,000, although I was able to increase my contributions for a few previous years via the carry forward rules. I normally contributed between £15-22,000 a year, including employer contributions.
My wife has a small pension from her time working. In recent years we’ve invested £3,600 a year in it. (That’s the allowance for a non-taxpayer, including the tax relief received).
Did tax influence your strategy?
It played a major role once we truly understood the full tax incentives on offer with a pension (especially for a higher-rate taxpayer)
In the last six years of my career, I increased my pension contributions every year. Including the employer contribution, it was 33% of my salary by the end.
We also invested in our ISAs where possible.
How often do you check or tweak your portfolio or other investments?
We track our net worth once a month via a spreadsheet. Occasionally I’ll check certain parts more often.
I have a further spreadsheet split into pre and post access to pensions. This models different growth scenarios for our investments. For example, a low assumption of 2% average growth per year – up to 7%. I also include the withdrawal of our living costs as part of the calculation in the same forecasts.
It’s not perfect but it gives us a starting point, allows us to see how we’re progressing, and assists with forecasting. Hopefully it will flag any potential issues so we can be pro-active if needed.
Wealth management: dealing with de-accumulation
We know how you made your money, but how did you keep it?
As my salary grew, we tried not to give into lifestyle creep. Bonuses were normally invested as lump sums.
One intentional tactic we implemented from our very first mortgage was to overpay every month. We continued with every mortgage we had. This enabled us to build up a large amount of equity and pay less interest, as we reduced the term of our mortgages with the overpayments. I understand this was at the opportunity cost of investing that money in the markets.
Also, as mentioned previously an important part of our FIRE strategy was domestic geo-arbitrage.
After we relocated, the money left over was invested in passive index funds. We made a lump sum payment into my pension, using the carry forward rules. We also transferred some older pensions from higher-fee companies into SIPPs with lower fees.
I continued to work from our new home until the end of 2022. Those two and half years of working from home saved us around £10,000 on commuting costs.
We decided to spend money on our new home from my salary, before I left work. This way the large, planned-for costs were paid for while I had a monthly salary.
Which is more important, saving or investing, and why?
They are both important. I’ve placed more importance on investing. But it must be the right type of investing for your own circumstances.
Long-term investing is key so that you benefit from compounding. You need to be disciplined and patient to see the rewards. It’s probably best to get into the mindset of forgetting about the money invested – especially if you are young, with a passive index tracker – so you’re not tempted to fiddle. This is how I approached paying into my pension.
Was financial freedom a goal with a timeline?
I always had a dream of some form of financial freedom in the future. A desire to break away from the path much-travelled. But I was unsure if and how this was achievable, until I discovered FIRE.
I made plenty of mistakes in my younger years. I was lacking relevant knowledge, direction, and intentional decision-making. These missing components are exactly what the FIRE community has provided me with, and so much more. Once we came up with our FIRE plan in 2017, I was hopeful of achieving freedom before we were 50.
For us the pivotal part of our strategy that allowed us to reach financial freedom by our mid-40s was domestic geo-arbitrage. This unlocked the home equity we had built up.
Can you share more of your thinking on your domestic geo-arbitrage?
I realised we would need to release the large amount of equity we’d built up in our house in order to be financially independent before we were 50.
I’d read about international geo-arbitrage, but we wanted to stay in the UK. My wife and I discussed the possibility, and we were both open to a new adventure and lifestyle.
We started by considering cheaper areas or houses in the Home Counties. But we were unable to find anything in the right price range that would work for us.
It was at this point I mentioned the possibility of East Anglia. As a boy I use to spend some time with family that lived in the area. I had very fond childhood memories – maybe slightly rose-tinted – and suggested it might be the right place to start our new life.
We did a lot of research online and came up with a list of potential areas. My wife and I visited these areas and later took our children along. The rest, as they say, is history!
Working from home really helped with the transition, as I was not wasting hours a day commuting. This allowed me to be more involved with our children.
We did move further away from family and friends, but fortunately they come and visit. We have also made new friends, mostly with other parents.
There is not anything else we miss from our old life. We’re looking forwards rather than backwards. Now that I’m no longer working, we can slowly piece together the lifestyle that suits us.
Did anything unexpected get in your way?
The biggest challenge was the psychological aspect of re-locating our family to a new area away from family and friends.
Looking back our worries were unnecessary. It is easy to say that now, but it turns out our children are very resilient. They just got on with it!
How are you de-accumulating your pot?
The de-accumulation stage is a scary prospect when you’ve spent so much time saving and investing. It feels like an unnatural shift in mentality. One that I’m not completely at ease with yet.
We’ve split our costs into two sections. Costs that have to be paid out of our bank account by direct debit – council tax, electricity and gas, water, costs for children’s activities – and all other costs that can be paid for by credit card.
This is because we have some 0% interest credit cards that don’t have to be paid back until 2024.
We have enough cash for approximately 16-18 months’ worth of costs. These are paid out of our bank account by direct debit. Most of this cash is in an easy access savings account paying interest of 2.75%. When we need to top up our bank account, which will be on a monthly basis going forward, we will transfer some cash from the savings account.
I believe this strategy – earning interest on cash we’ve saved and using 0% credit cards that are not charging interest – is called ‘stoozing’. The 0% cards will be paid off by selling units of our funds.
Sequence of return risk is a danger. We plan to sell some units of our funds from our taxable general trading accounts by the end of March 2023 (for the current tax year). We will then re-invest this money to utilise our ISA allowances for the new tax year, starting in April 2023.
We’re also planning for the reduction in the Capital Gains Tax (CGT) allowance over the next few tax years. We’re considering selling more units of our funds from our taxable general trading accounts by the end of March 2023. There is a strong possibility we may be selling these additional units of our funds at a lower price than we would have wanted.
Any cash raised will probably be split between savings accounts and premium bonds, until we can use it for the next tax year’s ISAs or to pay off the 0% credit cards or our living costs.
Do you have any further financial goals?
We may have to help our children financially in the future, so we’d like to maintain or even grow our pot as best we can.
It’s a fine balancing act, and we don’t have all the answers. It’s like being a parent. You do the best you can and adapt to the circumstances.
What would you say to Monevator readers pursuing financial freedom?
Monevator readers are very knowledgeable, and share interesting, helpful, and thought-provoking comments on the articles. I hope some will find our story inspiring! I always find real-life examples helpful, and so I have tried to be as open and transparent as possible.
There are so many moving parts to consider when deciding upon your strategy. I would say make a start as soon as possible – even if you are unsure or scared. Taking action is important. You can spend too much time researching, putting a plan together, and worrying about the right decision. If you are not actually taking any action, you are holding yourself back from progressing and the future you want.
You can evolve your strategy. You do not need everything to be perfect from the first step.
Learning: from the US to the UK
When did you first start thinking seriously about your finances?
In my early 20s after starting my first job. My father encouraged me to save and invest. He introduced me to ISAs and explained how they worked.
Did any particular individuals inspire you to become financially free?
My parents played an important role. I could see from their example that working hard, having a strategy, and trying to make the right decisions could provide you with future opportunities.
Can you recommend your favourite resources for anyone chasing the FIRE dream?
I split my time between US and UK websites, blogs, and podcasts.
Initially when I first discovered the FIRE community it was via the American websites and blogs. The first one I ever read was Millennial Revolution. I saw Kristy and Bryce being interviewed on a television program. A podcast I found interesting and helpful was Choose FI with hosts Jonathan and Brad. I also spent a lot of time reading the stock series on the J L Collins blog.
I then progressed onto the British blogs. They were directly relatable to my circumstances.
Monevator is a great source of information. I especially like the comments as you can learn so much from the different opinions and debates. I also enjoy Banker on Fire and Alan Donegan.
What is your attitude towards charity and inheritance?
We make donations to our local school and donate unwanted clothes, toys, and household items to charity shops. At some stage I would like to volunteer at a local organisation. Maybe give some of my time to people who are lonely, or who don’t see their family.
Regarding inheritance, we plan to leave everything that’s left to our children.
What will your finances ideally look like towards the end of your life?
Depending on market returns and our spending, we hope to have enough to see out our lives on our terms. We will leave our investments as they are for now. We hope there will be enough in the pot for it to keep growing in the long-term. We’re both due to receive state pensions, though not for the full amounts. They have not been included in our FIRE planning, so may add a little extra buffer.
Finally, we want to create many happy family memories and have a life well-lived.
Nice, eh? FIRE by your mid-40s, mostly on one (sizeable, but not sky-high) salary – and with kids! Clearly moving helped mightily, but saving and investing for 20-odd years was crucial. Questions and reflections welcome. Please remember Jake is just a reader and a one-time poster sharing his story to inspire others. Constructive feedback is fine, personal attacks will be purged. Thank you!
While it’s good that you have reached FI so early, it’s a long time not to be working.
I think finding some work that you enjoy but gets you up and out in the morning is important for long term physical and mental health.
At least you now have a choice, so well done.
Jake,
An extremely interesting read – thank you for sharing your experience.
OOI, is you net worth a gross or assumed net valuation?
Voluntary NI contributions may help make up your state pensions shortfalls. Are you aware there is an impending deadline (5/4/23 IIRC) to make up any shortfalls between 2006 and 2016 – normally you can only claim back a maximum of six tax years.
Well done Jake. I thought yours was a really encouraging story. Personally, I think that your primary motivations – to leave an unfulfilling and spend more time creating a good, rewarding family life – were perfect. Thank you for sharing your story, and for being so open and detailed. It was really appreciated and very helpful (as I’m sure it will be for others). Personally, I also agree with the concentration on S&P 500. North America is big enough and resilient enough not to be a huge risk imo (obviously others will beg to differ). I wish you every success, and happiness, in the future.
Thank you so much for sharing your financial journey with us. I have found this very useful. Blessings to you and your family.
Thanks for sharing your story – congratulations on achieving FIRE in your 40s and also busting the myth that it can’t be done with kids!
Wishing you all the best with what you do – if and when the time is right, you might return to some form of work, but to be in your place to be able to choose must be a wonderful thing and keeps the rest of us motivated towards our own goals!
Re #1 – Zzzzzzzz… I thought I’d get in there before Ermine!
If *you* find work that *you* enjoy, that’s fine. But to suggest to others that paid employment is somehow the solution to experiencing a fully rounded life, well, I don’t know where to begin.
Great article. Many thanks.
One slight issue is it’s difficult to understand the effect/benefit of the geo arbitrage without having numbers re the home counties property. We only know the value of the East Anglia house.
@Al Cam
Thanks for the heads up on the deadline for Voluntary NI contributions. I have one missing from 2006 that I can’t decide about paying. It costs £824 and adds approx £275 pa to the state pension, which on the face of it sounds attractive – but when considering that the £824 would otherwise be invested for c25 years, maybe not!
I feel like the savings numbers suggest quite a gloss over the “buy a house in the Home Counties 20 years ago” step that would be out of reach for someone with an equivalent income today.
@Mr Slow #8 Re NICS.
I think it depends on your age. When I did spent a bit of time on this I came to the conclusion that there’s no rush as long as you have time to get your 35 years max contributions before state pension age. E.g. a 40 year old with 20 years can relax for another 10 years and then reasess the situation.
Still probably best to keep an eye on policy changes but I don’t think missing one year is problematic.
Obviously depends on your own circumstances. DYOR etc, etc.
Thanks for sharing your FI story – really interesting to read and impressive that you’ve achieved this by your mid-40s without either a 6-figure salary or massive inheritance. Very fortunate not to have any mortgage which will be a major saving in terms of expenses, especially in a higher interest rate world. And I assume the US focus of your investments will also have helped given that US market has been the best place to be over the last decade or so (whether it will continue to be over the next decade is an open question!).
You have built an impressive pension pot from that salary in a relatively short period of time, but presumably SIPPs and the like will only be available from the age of 58/60 (depending on how savagely the government raises the SPA). Would be interesting to know how you plan to manage your income in the meantime – presumably by drawing down the capital in the ISAs?
The rise of flexible working since the pandemic should make geo-arbitrage increasingly feasible for younger workers in the future, although to some extent house prices/rents have risen faster outside London in recent years to reflect this. However, the difference in value for money (and I would say quality of life) is still eye-watering between, say, London and rural Lincolnshire!
@Jei — The article is about what @Jake did, not a treatise on what exactly is the best path for someone now. 🙂
That will be the case for most if not all these FIRE-side chats, I expect, unless an interviewee brings it up for themselves.
@Mr Slow (#8):
Your NI record now (and of course when you reach state pension age), your current age, and your working status all play into this decision.
This podcast may help:
https://www.bbc.co.uk/sounds/play/p0f37yd2
and note the heavy use of caveats by ML too!
Literally an episode of BBC Escape to the Country.
One thing that’s not discussed in this article is how people from London and Home Counties doing this are forcing up prices in the areas they choose to go to making them beyond the reach of those who were born and raised in those areas. Usually said people are also insufferable prats who do nothing but complain about absolutely everything, often stopping any development which alters the place from what they think they remember it being like when they used to go on holiday.
Thanks Jake – really interesting read. I am enjoying these FIREside stories and it’s especially encouraging for me to hear from someone who has reached FI in their 40’s with kids still at school age. Inspiring – thank you.
Thanks for sharing your FI story – as someone with no money behind them other than a salary, and a young kid in tow, it’s reassuring to know it can be done! I’m interested in starting to invest for my kid at the same time as for myself – I’m wondering if a SIPP would be best for them, while I contribute to an ISA alongside pension contributions through work?
Great article. I would be interested to have more insights as to how the wealth grew over time. How much did you have already when you discovered FIRE in 2017?
Hello all, thank you very much for your comments & feedback so far.
I will try to answer any questions as best I can.
@AL Cam (#2) – Regarding our net worth, it is the current valuations of our investments. I’m not actually sure if you classify this as gross or net with regards to investment valuations?
Good point regarding the voluntary NI contributions. I did check a few years ago and I didn’t find any contribution shortfalls since 2006.
@The Rhino (#7) – Valid question, after the sale of our house, paying off the outstanding mortgage and associated costs of the move. We were left with approx. £220k which was invested in our ISAs, taxable general trading accounts, and a lump sum payment into my pension.
@Jei (#9) – I understand your point, and yes house prices have continued to rise for each generation, making it more difficult for the next. I guess there is not too much I can say. For context I can add that our first home was a two-bedroom flat that we lived in for approx. 5 years. We then moved to a modest sized house prior to our final house in the Home Counties.
@Faustus (#11) – Thank you for your comment & question. Yes you are correct, the plan is to sell units of our funds in our taxable general trading accounts first, and then the ISAs before we can access the SIPPs.
@Conor (#14) – It could indeed be an episode of escape to the country! You make a valid point regarding property prices being pushed up. But I would add the reverse also happens with plenty of people from different areas in the country moving to London/Southeast when they are younger. Then later sell up and move back to the area they grew up in, thus also possibly pushing up prices.
In some locations the issue with prices being pushed up is more to do with second homes/holiday homes. Which can cause economic damage to a once thriving village/town as the residents are not permanently based there all year round. And are thus not spending or contributing to the local economy as much as individuals who have made the area their permanent home.
Thanks Jake for a very interesting FIRE story – major congrats at achieving it at your age. Also thanks to the Investor for publishing these informative and helpful series of FIRE articles.
You have a large proportion in US equity funds and I have about half my investments in them (most of the rest are more global) although I haven’t been investing as long as you. I hold them for similar reasons as you give – the large US companies operating globally and historical returns being impressive (although “past performance” and all that.) Just got a bit of a preference/bias towards the US market and global trackers are tied in over 60% to US market anyway.
But I’ve lately been concerned, after the last year, with commentators saying US looks overvalued and possibly looking at a decade or more of lost returns. So at this moment I’m pondering whether to move all to global trackers – like you said you may decide to do in future.
It’s not what I really want to do and don’t really see the US market being down for too long but then who knows without that crystal ball? Has the US market had its golden period for now? After the recent rally, I was wondering whether I’m being too hasty (although “bear rally” it may prove to be.) Just curious as to your thoughts as you have been investing in that market longer than myself?
Particularly when decumulating like yourself, and me soon to be, you don’t want your portfolio to be damaged by being sat in the gutter with poor/no returns for a decade or more. As you say decumulation is difficult as it is – shifting from saving to spending, especially if you have a frugal type of mentality like myself – to see your portfolio value decrease when you have spent all your life trying to build it, definitely is a mental barrier to overcome. But you do need to, to enjoy what you’ve toiled for all your life – no use leaving it all to the kids – they won’t have a problem spending it all!!
All the best for a long happy retirement.
Thanks for sharing Jake, and congratulations on your retirement!
I know how nervous you can be when agreeing to share your story, so I appreciate you doing so. This is such a great idea Investor, because it brings out the nuances in each person’s story.
@Erico1875 I’ve been FIRE for over three years now and haven’t had a dull moment – I have honestly never been bored. Work is but one way to be stimulated! That said, if it is what you want to do, go for it.
Jake, Thank you for sharing. It’s inspiring and informative and appears a simple strategy. I’m intrigued by the index investment in the S&P 500 and if it works out over time. I’ve heard some people think it’s the only index thats needed.
Best wishes, Metro
Hi, and thanks for your FIRE story. Helpful to all of us to understand the journey and with real figures too.
I’m sure most Monevator follower’s understand the unique role that ISAs can play in managing money in retirement but my eyes were opened when I started managing my elderly parents portfolios some 13 years ago. Drawing down ISA income and latterly capital to fund care costs, without any tax falling due, helps significantly although observing the pot diminish is quite stressful in itself.
So my observation is that ISA money is helpful in the later stages of retirement and not only in the bridge between FIRE and pension drawdown
@Jake (#18):
Thanks for the reply.
Assuming your annual spending excludes income tax, then the key net worth value is the net value. The valuations I think you are using are before taxes (i.e. gross) – so there could be a slight mismatch thereabouts especially w.r.t. the pensions and general trading accounts. This possible mismatch could make things a tad tighter (vs 4%) than they already are. Also, your biggest spending years may still be ahead of you as you are such a relatively young family. Any such divergences can be monitored for en-route; and IMO keeping a keen eye will be important.
Re NI, what in particular caught my eye was when your wife stopped working and I just wondered if she had a partial year that could possibly be made up to a qualifying year at a fraction of the cost of a whole year of voluntary contributions. Just a thought.
FWIW, in my experience getting over the deaccumulation ‘unnatural shift in mentality’ is never easy; six years plus and I have not cracked it!
Best of luck.
What a brilliant write up this is. Thanks for taking the time Jake and I hugely admire how you’ve largely achieved this on one salary with two young children.
I can’t agree with the comments on property prices. One would say you bought at a great time and sold at a great time. Furthermore you’ve moved to a lower cost of living area and taken your entire life with you. This isn’t a second home. This is you and your family actively involved and invested in the community and spending your life as part of it. That’s surely the type of family an area wants to attract?
I’m 37 and have a similar net worth to you but through selling my business. I still do some consultancy work and have a little equity in a growing company but it’s all on my terms. I work around 5 hours Monday to Thursday and have every school holiday off (two young children too). It really doesn’t feel like work but covers our expenses and allows our investments to grow.
You may find something like this aligns with you as the children get older. I’d be keen to know more on your story so it would be brilliant if we could have a catch up in a years time?
Thanks again for writing and well done on changing your life for the better. No children want to see their parents enduring such a working life when things can be so different.
@Jake
Well done, and thanks for saying “children” throughout and not resorting to my pet hate, the “K word”, which was a derogatory term when I was young and which for me remains one.
Thanks so much for sharing Jake, and thanks to the Monevator team for setting up this great feature of the site. It is incredibly helpful to see real numbers attached to these stories. Some encouraging, some… challenging.
@Matt (#15) – Thank you Matt, glad you find my story inspiring.
@Hi-FI (#16) – Good to hear you found it reassuring. We have opened junior ISAs for the children. Which they will have full access to once they turn 18. Gaining access to the money at such a young age can been viewed as a negative. A SIPP is an interesting idea for a child, very long term as it could have six decades of compounding before they gain access.
From my own experience I would say contributing to a workplace pension, especially if your employer has some kind of matching scheme, is very worthwhile. I have also contributed to ISAs along with my pension contributions throughout the years.
@Jimbo (#17) – Thank you for your question, I will have to do a little research to see if I can come up with a figure for you. Will revert in due course.
@Jon (#19) – Thank you. As you point out there has been some negative press about the US markets. Plenty of doom & gloom regarding valuations, and poor future returns etc… I understand the negative outlook, and how unsettling all the headlines can be.
From my own perspective I am going to hold tight for now and not panic. As I mention in the FIRE-side chat, I may sell some extra units of my funds in the taxable general trading accounts before the end of the tax year. This is due to the reduction in the Capital Gains Tax (CGT) allowance going forward. I haven’t made a final decision yet, still mulling it over.
@Mark (#20) – Appreciate the kind words Mark, it has been a little nerve-wracking telling my story. It is uncomfortable not knowing how it will be received. I decided to do so in the hope that it may be helpful to others. I always found it very helpful and thought-provoking when I read real-life case studies. Even if it is just to rule out that certain strategies/investments are not for you.
@Metro (#21) & @Ryan (#24) – Thank you very much for your kind words. I am happy to report back in 12 months and beyond with an update on how everything is going. Of course, only with the kind permission of @TI.
@Bellabeck (#22) – That is a very interesting point, and it would certainly be beneficial to still have access to some ISAs when we start our pension drawdown.
@Al Cam (#23) – Thank you for the clarification. I have tried to include tax in my forecasting models for when we start accessing our pensions. I agree with your points regarding possible increases in spending, especially with a young family. We have to keep continuously monitoring our situation and make any necessary adjustments as we go. Appreciate your wise words.
@Factor (#25) – Cheers Factor.
Great work, Jake (and missus). Domestic geo-arbitrage played a big part in our FI story too, although our path was a little different.
Now that you’ve retired, how do you spend your time?
@Jei – different opportunities and challenges are presented to every generation. Inevitably, one limitation, of course, of FIRE-side chats will be the context will have changed since a middle-aged FIREr got started, or that a young FIREr is doing something rare (eg earning well over the average salary/living on peanuts). I can remember being part of the HousePriceCrash community in the early 2000s, and thinking “I can hope for a crash, and while I’m waiting, I can improve my earning capacity and get better at saving as a Plan B”. In the end, I benefited from a small dip in the market in early 2010s, the aforementioned geo-arbitrage, a keen seller and well polished negotiation skills.
> domestic geo-arbitrage.
I like it. Although there’s some argument that you have to be near a city for employment resilience, once that requirement is out of the way then not only are other parts of the UK cheaper, but they are often closer to natural beauty, which matters more to those of independent means. Talking of which
@Erico1875 #1
> I think finding some work that you enjoy but gets you up and out in the morning is important for long term physical and mental health.
I venture that if the best thing you can think of to do with your time on earth is working, then you lack hinterland, sir. But yes, if you’re not motivated enough to get up and out in the morning, then stay at work. There appears to be anecdotal evidence that given the break from the daily grind in the covid period, a fair number of people came to the conclusion I came to a while ago. Work is overrated as a pastime 😉 H/T Scott #6
> I had become disillusioned with my employer. Reaching our FI number when we did in 2022 allowed me to end that relationship. It can be hard to take a step back and understand how unhealthy a work situation is for you and your family.
That seems to be an increasing problem with work. It seems to be getting more shit over time, for more people. That may, of course, be a second-order effect of wider decline of the UK or the West.
I would second Al Cam’s idea of investigating making up your SP, preferably using Class II if you do end up doing any self-employment work. There is no urgency, you have up to reaching SPA to do it, but at < £200 for an extra year SP entitlement, Class II NICS are a steal
Thanks for sharing your story Jake. I was wondering if this is not too risky to draw such large amount of income just from your ISAs and that taxable investment you’ve mentioned, until the time when you have access to SIPPs. If your annual income is about £35k and your pot (excluding SIPPs) is arround £400k then your WR is quite substantial and way above SWR of 4%. If market drops before you have access to SIPP your WR will increase even more to sustain the same income level. If this would be the case and you would significantly deplete your ISAs, then when SIPPS become available you would be forced to use them (rather than tax free ISASs) to fund your £35k income. That would then potentially attract tax too, increaseing WR even further. All in all, I just feel this is quite risky, but, I am sure you got it all planned and I am likely missing something here. Congratulations on achieveing FIRE and also while having kids, absolutely impressive.
My approach for decumulation phase is very simple: I will build the floor (hold cash to cover my basic needs for approx 10 years) untill my, db then state penisons kick in. Everything else will be 100% in equities. I like risk but only the one I can afford to take. All the best
With two children each parent can claim Child Benefit for one child each and this will add to your National Insurance record. Many of those earning above £50,000 stopped claiming this benefit because it was withdrawn from them by the tax system. If that’s the case, then it’s time to resume claiming.
Jake, thanks very much for being willing to share this – it’s really inspiring and informative as someone who is following a similar trajectory but 5-10 years behind you (also as a parent currently living in the Home Counties).
A couple of questions (if you’re happy to answer them):
– what’s the thought process / emotion behind keeping the big slug of ISA money invested in a single company? Even if you really rate the company I’d feel a bit on edge at the idea that a single big black swan event affecting that one company (major cyber-attack, accounting scandal etc.) could by itself blow a sizeable hole in my FIRE pot, and if it’s in an ISA then there’s no CGT angle to consider.
– did you do much contingency planning before you made the leap from FI to RE, and what did that look like for you? I’m thinking along the lines of “what would a return to work look like for me if it was needed?” or “what would our ‘bare bones’ annual spend be if we needed to cut back?”
– what have been the biggest surprises of early retirement for you so far?
Thanks again for sharing (and to TI for running this series!)
@Ryan (#24) – Once again thank you for your kind words of support. Reading your comment has just reminded me that we have invested a reasonable amount of money in the local economy. By employing various local trades people/companies to assist with changing/updating our new home & garden. We also visit local fairs/events/shops where we purchase locally produced goods/items. As a family we are fully committed to supporting our local community.
@G (#28) – Thank you. Interesting to hear that you also used domestic geo-arbitrage in your FI journey. Do you mind me asking how long you have been FI, and are you retired now? Which part of the country did you move from and to?
It is very early days since I stopped working. There is still some structure to the days due to the morning school drop off and the afternoon school pickup. Our children do a lot of activities outside of school which currently covers late afternoon/early evening of every weekday.
I have spent some time working in the garden, we also try and go for a walk at least twice a week and visit new places. We have a few small projects in the garden and in the house that we will try to tackle once spring has arrived. We have plenty of time to acclimatise to our new way of life.
@ermine (#29) – Thank you for your comments. I was fortunate that I was still able to work from home after our move. Now I have more time to explore our local area and the great outdoors.
@Peter (#30) – I agree there is certainly an element of risk to our plan, especially if there is another major market correction. I have run through a few different market scenarios with various forecasts based on our current investments & spending patterns.
If the worst happens we will have to cut our cloth accordingly based on the situation and the resources we have at the time. For example, instead of going on holiday, we could have a couple of weekends away, or family days out. There is also available space in our current budget that we don’t have to use if we are worried about our financial situation.
My wife and I have discussed these risks and currently we are both comfortable with our situation. We have always acknowledged that we need to be flexible and have a fluid approach.
@Getting Minted (#31) – This is a very interesting point, so thank you. Child benefit is on our list of things to investigate for the new tax year. We did indeed stop claiming. I was not aware that each parent could claim separately for one child. If I may ask, do you have any further information on this?
Getting minted’s comment also piqued my interest. I don’t think they’re right unless the parents have split up and are living separately. But a quick internet trawl could neither confirm or deny it. For sure one parent can get the NI cover, but I don’t believe both can. I would be very happy to be proven wrong with a suitable link.
@Jake. We moved from London to Wales (via a failed attempt to settle in Yorkshire). We didn’t have a house to sell, but used the higher London wage/small side hustle combined with renting at the bottom end of the market to save enough to buy a modest place in Yorkshire/Wales outright.
FI-wise, probably around 5 years – but FI is a spectrum. If I had retired five years ago, it would have been a very lean FIRE. Now it would be more comfortable, but instead I have semi-retired (work 3 days/week). My paid work has evolved around me. One segment of it, for example, I get paid to teach a sport and gain other benefits eg meet interesting people, stay fit and it genuinely rewarding to see the transformation in those I teach. Another part, is very much cause related and I would probably do it even I wasn’t paid.
@Jake @The Rhino
My wife and I have two children and we each claim Child Benefit separately, one child each, and have done for several years. Please see the section “Change who gets Child Benefit” at this link: https://www.gov.uk/child-benefit/print
Congrats Jake. Well done on the hard work and planning.
I was wondering how are you planning to balance the different stages of fi for you. I imagine youre drawing your isa down £35k per year (until £0 if unlucky) until 57 and then switching to your pension before state kicks in another ten years later?
Great to read your story, thanks.
I think your wife can claim NI credits from when she stopped work to care for your children too:
https://public-online.hmrc.gov.uk/lc/content/xfaforms/profiles/forms.html?contentRoot=repository:///Applications/NICs_iForms/1.0&template=CA9176_en_0.5.xdp
@Jimbo (#17) – It has been difficult to try and calculate our net worth back in 2017 as we were not tracking it in detail as we do now. Before we moved, we de-cluttered our home and disposed of a lot of older paperwork, some relating to previous investments and savings.
We had a mortgage which we were overpaying on each month. We also sold a large portion of our ISA investments to help with an earlier house deposit. The best estimate I have come up with is between 150k-180k with the outstanding mortgage deducted. This does not include the equity we had in our house.
@MonkeysOnARock (#32) – That is great that you found the FIRE-side chat so helpful.
A good question regarding the ISA invested in a single company. I have considered many times selling some of the shares. Especially in 2021 when my investments in the S&P 500 were doing so well. At that time I was thinking about the opportunity cost of not selling and the potential profits I was missing out on.
The single company we are invested in has had such a hard time and lost so much value since the financial crisis and then Covid. As we have not sold through all the bad times, for now we have decided to keep hold of it. The price has steadily been increasing and it pays a good dividend that is automatically re-invested.
I try not to spend too much mental energy thinking of the worst case scenarios. I used to focus on the potential negative outcomes too much. We are aware of the risks and acknowledge the potential downsides. We will continue to keep our whole portfolio under review, especially during the danger zone period of the first few years of our de-accumulation. If the price continues to rise this year, we could be tempted to sell a portion of the investment and maybe diversify a little bit more into a global tracker for example.
In answer to your second question regarding contingency planning. Currently I have no intention of returning to work. But if the need did arise, I could probably find a role in my old industry. I don’t think it would be in the same position that I left. I gained a great deal of experience dealing with many different departments and companies. But the longer I am out of the industry, maybe the less appealing my experience and skills become.
We have a lot of flexibility in our current spending. The figures I mention in the chat 34-35k a year give us what we consider a comfortable family lifestyle. Remember we don’t have any rent or mortgage costs. If necessary, we would be able to cut back by a decent amount and continue with a lower yearly spending figure for a concentrated period of time.
On the flip side, we will also have to monitor our spending to make sure we don’t become complacent and start spending more than our ceiling amount.
As it is such early days since I stopped working, the biggest surprise is how busy I have been so far! It will be interesting to see how this changes over the next 12-24 months.
@G (#35) – Thank you very much for the extra info. It sounds like you have found a good balance to the lifestyle that suits you.
@Getting Minted (#36) – Thank you for your reply, I will have to spend some time looking into this.
@Andrew (#37) – Cheers Andrew. You are correct in your thinking, during the period before we can access our pensions. We will start by selling units of our funds in the taxable general trading accounts, and then move onto our ISAs. We hopefully will not be spending our ceiling amount of 35k every year.
@TARDIS (#38) – Thank you for the comment and info. We will have a look into this.
Great write up and very aspirational to see someone on a “normal-ish” salary, with a couple of kids in tow and a low to no earning spouse. FIRE discussions are dominated by so many high earning DINKY’s (or DINKE(ver)’s) that for us mortals it can sometimes seem like a pipedream with very high barriers to entry.
Great story,
Just to add that NI credits attached to Child Benefit end when the child is 12, even through CB payments continue after this age.
https://www.litrg.org.uk/latest-news/news/170615-you-may-get-national-insurance-credits-if-you-claim-child-benefit-%E2%80%93-it
@Jake Yep. Precisely what you have said. Not to mention your contributions to council tax, clubs/activities with the children and everything else which comes with having such a family in the area.
I imagine in the years to come you will contribute even more; as will your children as they grow older.
The approach you have taken on such a modest income is incredibly inspiring. More should follow in your footsteps and cut their cloth accordingly. I really look forward to reading how things progress as seeing the other side of FI is really interesting reading for many.
Thanks again for taking the time on the interview and thanks to the Monevator team for conducting it. Seeing more from a UK perspective is something I’ve been looking for.
Thank you for revealing all, Jake! I’d also like to say – it helps for two to be on the same page, as we can read hear. When I was a stay-home mum for 6 years, I went into super-saver mode, also stashing savings in the 7% Icesave account (gedunk!).
When I went back to work, and my husband progressed in his career, we stayed quite frugal. Am sure my now 19-year-old wasn’t scarred for life.
(“Just because they have it, doesn’t mean they can afford it. Just because we don’t have it, doesn’t mean we can’t afford it”) Yeah, yeah 😀
Well done Jake for achieving your goal and encouraging others to follow and start afresh.
Something that’s not been mentioned, is the need to be within a reasonable distance of hospitals, and a good medical centre. Hopefully, it will be a long time before you have to consider that, but the day will come. In London, and most big cities you can nominate where you want to be treated. You don’t get that choice rurally unless you want to travel. To spend 15 hours in A&E or 9 hours waiting in an ambulance with cardio problems is not unusual.
The cheaper cost of living is a myth. It’s costs more rurally, sometimes by a substantial amount, unless you go to the big stores which can be a 20 mile hike. You can of course have your groceries delivered, and in spite of their hype, Ocado don’t deliver everywhere. Good restaurants are few and far between they have no competition so they take the —s. Iv’e lived in many places, towns, cities, and villages each have their good points, but if you are older, don’t have family, or they live far away, rural living is not what it’s hyped up to be, unless you get the “Rose Tinted” from specsavers.
As an aside, after 25 years in the same job, within 90 minutes I cleared my desk, and never looked back. Never worked for anyone else just used my Hoxton education to get by, some 30 odd years ago. One absolute essential, a good partner.
@Conor 14… One thing that’s not discussed in this article is how people from London and Home Counties doing this are forcing up prices in the areas they choose to go to making them beyond the reach of those who were born and raised in those areas.
That was the case 60 years ago. Iv’e never heard the locals complain that their property values increased tenfold as a result.
@ Jon 19….you don’t want your portfolio to be damaged by being sat in the gutter with poor/no returns for a decade or more.
You’re doing it again, the US is the largest economy 23 Trill$. It goes down it goes up. It’s all a gamble, no one is entitled to longevity, it’s luck and grannies genes.
@Ryan 24…..I think that you’ve got it sussed, well done, and enjoy it.
@Dan (#40) – Cheers Dan. It can become a little frustrating at times when you are struggling to see any progress. Keep going, be patient, and try to enjoy the other aspects of your life. I know from experience that is easier said than done sometimes!
@Alice Holt (#41) – Thank you Alice, that is a very good point regarding the state pension NI credits only being received for children until they turn 12.
@Ryan Gibson (#42) – I like your outlook, it sounds like you have a good setup. We are certainly contributing plenty to the local economy on a weekly basis via the children’s clubs & activities!
@Pendle Witch (#43) – I agree, that embracing this new adventure together as a partnership has really been beneficial. I would also add that if you don’t have a partner on your journey with you. Hopefully you are able to talk and gain support from a family member or a close friend or two. As it can be a frustrating and lonely path to travel at times.
Icesave is a blast from the past! We also had some savings in an Icesave account until it all went wrong.
@Barney (#44) – Great point regarding the hospitals. Fortunately, we have a hospital reasonably close to us. We have some friends who work for the NHS, and they said something similar recently. That some places where people like to retire to, maybe to the coast for example. Can be further away from a hospital than the area they have just relocated from. At a time in their lives when they will probably require the services on a more regular basis.
I would describe our location as semi-rural. We have plenty of countryside close by but are also close enough to shopping areas that meet our needs.
Agreed that if you are older and possibly on your own it may prove to be more difficult. Especially if you have come from a well-connected city or town.
Good to hear that you never looked back after clearing your desk. May I ask how you spend your time now?
Thanks Jake, very inspiring, wish you all the best!
I love these FIRE-side chats, already can’t wait for the next one!
Another example of £1.25-1.5 million household net worth being a marker to aim for in terms of your typical UK FIRE couple.
It is an incredible achievement on those salaries and ages, especially if the higher salary was only achieved in the last few years, and with two kids to raise.
It would be interesting to see a breakdown of gains from accumulated home price increases vs the S&P500, although I realise that may be difficult if you haven’t tracked performance in detail and it is obscured by pound cost averaging and varying contributions over time.
You certainly must have made some good choices on moving up the property ladder, and it sounds like cashing in on all that equity near the peak to relocate was also timed well.
The dependence on the S&P500 and a single bank stock does set alarm bells ringing for me though, especially since you are now drawing down.
I just couldn’t stomach the potential for a 50% loss in one year.
Yes, if literally forced at gunpoint to pick a non-factor single country index to hold for 40-50 years I guess the S&P500 would win, but I’d shift at least a good chunk of that to something like VWRL and/or VHYL and another chunk into bonds, even if only 10-20% or a bare minimum of 2 years worth of spending.
My view is you’ve already won, so why risk it now on sequence of returns risk?
Nice article – thanks for sharing. Your situation is similar to mine (I even also live in East Anglia!) albeit I’m a few years behind you in my journey. This has inspired me to look into FIRE for myself – thanks!
Fascinating read Jake, thanks for sharing. We’re not too far behind you on the path to FIRE with 2 kids in tow, really encouraging to read case studies of people having pulled the trigger in similar circumstances. Best of luck for the future.
Massive Congrats and thank you so much to Jake (and Mark from the previous FIREside chat), for being so open and sharing your numbers & journeys, as it is of huge comfort to all of us newly early retirees, to read UK based case studies!
I quit work 14 months ago, haven’t looked back at all – and loved every moment of my freedom since then.
Not missed work at all, as I have swapped my time to doing other enjoyable hobbies instead, which I never had time to do while working.
I have loved waking up in the morning when I am ready, rather than be forced by an alarm clock, and not having to scrape / defrost the car early in the morning during the winter, just to be able to get to work! Feels so luxurious, I am still smiling about it 14 months later!
To be honest, I have no intention of ever working again, and want to enjoy what time I have left, after sacrificing quality of life for work, via working 60-70 hours a week, for 17 years non-stop (apart from a couple of holidays annually).
Not long after I had FIRE’d, my neighbour passed away. He was only 60, struck down suddenly by terminal cancer, followed by a quick death.
He had worked hard all his working life, and sadly never got to live long enough to enjoy the fruits of his labour (i.e. his savings, investments), nor live long enough to access his State Pension, after 40 years of paying into the NIC system!!
I have found keeping the above in mind, has made it much easier for me to make quality of life decisions.
My husband chose not to pay in a gap in his NI record, in case he doesn’t live long enough to get the full benefit of it (like you said, versus investing £800 for many years himself!).
Thank you again to Monevator for this epic FIREside chat series, and I am already looking forward to the next one!
Someone in the comments suggested a catch-up with Jake and Mark in a year or two’s time, and that sounds like a brilliant idea – especially if the latest financial numbers are included in the follow-up piece, as decumulation is far scarier than accumulation!
@ Jake 45
Having moved back to the area March 21, I spent a lot of time organising the garden so that it’s enjoyably maintenance free. Since then Iv’e had a prior unknown inherited health issue kick in, and last September my partner fractured her pelvis in three places exiting our car, (I think I can hear the soft strain of violins) so as yet I have to get organised in that respect. But when I was here previously I did street photography, not hiding behind a long lens but up close portrait wise. I got used to being blanked
I also used to fish a small private lake, very casual pure enjoyment no competition, and if you didn’t get something over 4lb every visit whilst watching the odd kingfisher you should turn it in because it was so easy. I sometimes floated crust on the qt but it played havoc with my BP with a carp on the end.
There are a number of chalk streams in East Anglia, with the usual trout, although I never fished them. I found the best place for tackle to be Angling Direct, with the smaller stuff from China via Ebay.
Two other points, as I understand, it East Anglia, particularly Norfolk is one of the lowest government funded counties, which can be a big wake up call regarding facilities for those exiting towns and cities.
Also, a big garden is nice. But do you really want to be mowing and weeding when you are older, or enjoying a pint and watching the world go by……Like Morse.
I’d add a tip to start a small business. Nothing very much, just a few clients or something like that. It will keep your NI record ticking over until you get to maximum state pension and is the least hassle and least cost way of doing so. A bit of gardening work or odd jobbing for old folkses in the village would fill the bill nicely.
Thank you for sharing your story, Jake. Today I shared with my wife some key parts… useful, I think, to explain that this is feasible. We already live in a place like yours, in the countryside, but in the northeast of Italy. Very useful to see what you did and congratulations for this great result. All the best and a big CIAO from Venice area to you and the other readers too.
I really like this interview. Jake and his wife have really thought about their values and what matters to them, and have pivoted their lives.
I currently love what I do, so continue to live and work in London. I own my London flat outright, have a BTL house in Bristol and automatically invest each month in passive funds.
It’s very freeing knowing that I have the option to do a similar geo-arbitrage to Jake if I lose interest in being based in London. However I don’t feel the call to retire so will keep accumulating capital, and experiences, in the meantime.
@Spud (#48) & @Fitipaldi (#49) – It is great to hear that you enjoyed this chat, and that it may help/encourage/inspire in some small way.
@FIRE’d@43 (#50) – Thank you and it has been a pleasure. It is very encouraging to hear from others who have finished work and are not regretting it. Do you have any tips after 14 months of not working for someone that is just starting out on the same path?
It is so sad to hear about people who work into their sixties, finally retire and then unfortunately pass away too soon to enjoy the full benefit of all those years of hard work and saving/investing. During our discussions regarding our FIRE/future lifestyle plans and aspirations my wife & I talked about the unseen damage that could have been done to our health due to work pressures, stress, burn out etc…
We tried to make a balanced decision that we were comfortable with based on our circumstances. The main considerations being financial, spending more time with our young children, removing the unhealthy negative employer relationship, and creating a more relaxed family lifestyle of our choice.
Only time will tell if we have made the right decisions. We understand and acknowledge the risks and hopefully the benefits. Our strategy will continue to evolve over time as we will make any necessary changes that we feel are required.
I am happy to keep this real-life case study going if it is of interest. As long as @TI is also happy with the idea. We could possibly have a catch-up FIRE-side chat every 12 months.
@Barney (#51) – Are you based in East Anglia? Very interesting to hear about your street photography. As photography is an area of interest, I would like to start learning about it in greater detail. I also plan to spend more time fishing, which I believe is a great way to spend time outdoors with nature and has mental health benefits. That small private lake sounds like the kind of venue I need to find.
Sorry to hear about your health issue, and your partner’s accident.
I used to watch Morse in my youth, I would definitely vote for enjoying a pint and watching the world go by!
@The Hare (#52) – Thank you for your suggestion, it is something to keep under consideration as a possibility in the years ahead.
@SirRik (#53) – That is great to hear that you shared some parts of our story with your wife. It makes it all worthwhile, so thank you.
It is intriguing to hear that you live in the northeast of Italy. Do you mind me asking how long you have lived there, and why you chose Italy? And a big CIAO right back at you and your wife!
@Ian (#54) – Cheers Ian, that is really nice to hear, thank you for the kind words.
Thanks Jake, and your response about people getting to retirement and being too ill to enjoy it resonates. My dad was older, and by the time mum retired he was too sick to have much of a retirement with her. This taught me to make sure I was serving the needs of current me, not just future me.
E.g. don’t do a job you hate, that causes you massive anxiety, just to serve future you. My dad and grandad were both sick, literally, before work, which was definitely not healthy and the time and I’m sure affected them in later life health too.
@Jake One more question if you don’t mind? I wondered how new friendship circles have taken your retirement given such a young age? I.e: school parents you may have spoken with etc?
I’ve always found it interesting seeing everyone else rushing around to get to work while I’m taking things at my own pace.
I just was curious what your experience has been like moving to a new area and have you told people you are retired?
Thank you!
@Ian (#56) – Sorry to hear about your dad & grandad. Trying to strike the right lifestyle balance between your current and future self is so difficult. There are so many variables and moving parts that require attention. You seem to be in a good place in this regard as you are aware of the dilemma and have addressed it.
@Ryan (#57) – Great question Ryan, one that I have been thinking about recently. Currently only our immediate family and a few friends who I have known most of my life are aware that I am no longer working. I am unsure how to approach the subject with new friends that we have made since our move. Most of our new friends are other parents who we have met on the school run or at the various clubs/activities that our children attend.
Since the move I had been working at home the whole time and did the school run most days. From the outside it does not appear that anything has changed in our lifestyle. I am a little concerned about how our new friends, that we have only known for a year or two may react to the news.
I would be interested to hear from other early retirees how they approached the subject with friends and acquaintances. Did you tell everyone straight away, or maybe no one, did people find out without you telling them? What kind of reactions did you receive, and how did you deal with the negative ones?
Dear Jake, I live here because I grew up in Italy and I’m italian. Nevertheless I can transform your question into this one: “why do we continue to live here?” Hopefully the answer could be useful also for other (british) readers: this part of Italy is rather rich, for sure aligned with a good european standard, with an incredible amount of small- medium companies and a strong entrepreneurial spirit. If you live in the countryside, you can enjoy the same advantages you mention in the interview and, in the same time, you are not far from big/medium cities: Venice, Padua, Treviso, Trieste, Verona…all reacheable in a timespan of 30-70 minutes. Good quality of life standards and an easy connection to Austria, Germany, Croatia, Slovenia. Therefore, for the moment, our idea is to continue to live here. When “full FI” will be into action…an alternative could be the central part of Italy (Umbria, Tuscany, etc.): small towns or villages with a good “life rithm” ( I don’t know if I’m using the right words). But with some of the disadvantages you and other readers mentioned regarding areas far from hospitals, etc. I hope this answers to your question. Ciao!
Thank you Jake for sharing your story. It is interesting that you don’t include your paid for home in your total assets.
I often hear conflicting advice on the concept of including the value of one’s primary residence in their total net worth and indeed in their asset allocation. To me, where one lives is an expense, like utility bills and food, etc, and should not be considered in their total net worth or their asset allocation. To this extent a mortgage is not counted as a negative fixed income amount in their asset allocation.
Having no mortgage merely means that a large amount (but certainly not all) of the person’s housing costs are removed, they therefore need less assets to live on than if they have a mortgage.
If people include the value of their primary home in their net worth and asset allocation, it all just gets too confusing and makes it impossible to compare the asset allocation for someone who was renting and now owns, someone who was owning and now rents or someone who did have a mortgage and now doesn’t.
Surely the idea of an asset allocation is to have the right mix based on the persons risk tolerance to pay their living expenses and lifestyle whether they are renting or owning, with or without a mortgage.
After all, if we need money, we can’t sell portions of our house to pay for things or rebalance to their preferred asset allocation.
@John — In my view your house is definitely an asset. If you didn’t have it, you’d presumably have other assets in lieu of the equity in your home, and in addition rent to pay.
You can sell a house and — presuming you’re not in negative equity — then you’ll have cash. As with other investments.
If someone doesn’t believe there house part of their net worth then they are welcome to assign the deeds to me. If that’s not palatable, then well I’ve just proved my point. 😉
I understand why some people ‘bucket’ it differently in their thinking, which is fair enough, but that is different from saying it’s not an asset. (It’s more akin to saying “I don’t think about my pension assets because I’m only 30 and can’t access it for 25+ years” which makes sense if you’re thinking about day-to-day spending in the next few years — but where similarly if someone didn’t have any pension assets by say 50, they would be concerned, even though they *still* couldn’t access those assets).
Here’s more:
https://monevator.com/why-house-is-an-investment-and-an-asset/
Another thing, apart from a tiny amount of cash (I make it about 1.3%), do you have any fixed income in your asset allocation and, if so, what percentage?
If not, at what age do you intend to introduce it and do you rebalance with the 1.3% cash? Do you feel that the such small amount of fixed income will have any real benefit in that regard, especially cash in not negatively correlated to stocks anyway?
Thanks Investor. And in regard to the asset allocation question…?
@ Jake (#55) – You are completely right about unseen damage from stress and burnout. My neighbour who died aged 60, and never got to enjoy his money / retirement, as per my previous comment, was otherwise a healthy guy (non-smoker, non-drinker, exercised, healthy weight).
However, his work stress was quite high and his widow wife is convinced this contributed to abnormal physiological changes, which led to his sudden terminal cancer diagnosis.
As mentioned, my husband also has 1 missing year of NI contributions. I forgot to mention in my previous comment, that he also decided against paying this, for a small state pension uplift for the following reason:
As far as we know, the surviving spouse or children can’t inherit the deceased’s state pension!
So, my husband decided to invest the approx £800 himself, so I could inherit his investment portfolio if he died before me (rather that it go towards state pension for a small uplift, which he would only benefit if he lived many years after state pension age to benefit from it).
Thought I’d mention this, as you said you were mulling over this yourself – to help you decide either way, based on your own circumstances.
Regards to your other question. We have only told immediate family and close childhood friends about retiring early.
On revealing this to old close friends, they too admitted they were planning for an early retirement (age 50 in their case), but hadn’t told anyone, at the risk of being viewed as weirdos!! Small world!!
A couple of neighbours have noticed we no longer leave early in the AM with both our cars. When asked, we have fibbed and said we were working from home (which luckily sounds plausible since the pandemic came along!), as we still haven’t thought of a good answer to this (as they are all older than us, but still working full time).
I’m not sure they completely believe us, as we’re out in the front garden tidying or mowing the lawn at 10.00 am sometimes, and leave the house to go for a 2 hour walk locally after lunch some days!
Would be nice to know what @TA (or others) have said to neighbours when asked about latest work situation, when they have in fact they have FIREd!
Yes – if @TI would be willing a follow-up post in a year’s time would be epic!
Enjoy every moment of your sweet new freedom – you and your wife deserve it!
The Investor,
Just to clarify as we are now certain that someone’s house is an asset, is their mortgage a liability? Therefore, in their asset allocation, is the mortgage a negative fixed income figure? Therefore, unless they want more than a 100% stock allocation, should they only invest once they have no mortgage? Thanks.
Hey John, my two cents would be a mortgage has an implied rent, which you could consider the interest portion, with the asset/liability applying to the equity portion.
I view repayment mortgages as “renting a house from the bank, coupled with a long term property linked investment plan”
@John — Their mortgage is a liability. The debt outstanding is a negative contributor to their net worth / a liability on their personal balance sheet. The monthly payment is a cost on their budget.
@Ian — Quite right! 🙂 https://monevator.com/a-mortgage-is-money-rented-from-a-bank/
Jake, thank you for sharing – very interesting to see what other people regard as ‘enough’. My wife and I are a little older than you (60/54 respectively), and have very similar amounts both in our homes and savings but, whatever the sums say, I wouldn’t sleep at night if we were decumulating!
The main factors causing my caution:
1. the recent, rapid, and largely unforeseen, increase in the cost of living – I reckon 20 – 30%, looking at food, energy and fuel, which are the biggest proportion of our costs.
2. significant one-off expenditure – replacement cars etc. – making a dent in our net worth.
3. in recent years we’ve been in the fortunate position of being able to help our adult daughter – firstly to avoid a forced property sale whilst in negative equity, and, latterly, to get back on the property ladder, by helping with a deposit – again, something it’s difficult to predict.
If no longer accumulating, we are currently ‘plateauing’ – doing just enough to avoid dipping into what’s already saved!
My mother died aged 56, my father 94, which rather illustrates the difficulty of working out when to FIRE!
@ Jake, I’m currently in Norfolk, the lake is at Bridge Farm, Litcham, mid Norfolk.
I believe that a camera is a prerequisite where family are concerned because they are constantly changing and you have a permanent record, should that change. Many would be david bailey’s must have the latest tech, so you can get something to start off with second hand that will meet your needs, but it must take “raw” files as well as jpeg. I don’t recommend a “kit” lens, no matter how good the camera, everything goes through the glass, again, buy decent second hand. there’s two types of lens, zoom and prime, which are cheaper and better quality especially for portraits. Every pic needs post processing, especially raw files. You don’t need photoshop, “Affinity Photo” is currently on offer at £39 it’s been upgraded although I’m not sure if the upgraded version has a “browser” to access your pics. Also “On1 2022” is another but a bit dearer, that has a “browser” which shows all your photo files/folders on your pc/mac. I have both and they are as good as photoshop and a once only buy.
Every jpeg is instantly processed in camera before you view it, it then dumps the rest of the file so you can never retouch it because theres nothing left to adjust. A raw file is exactly that, everything is captured, post process it and “save as” and the original raw file will always be available. Many mobiles take excellent pics, but if you want to get the best out of them it should be able to take pics in raw.
Sometimes the OU runs a course with the RPS. Main thing though is to snap the kids, and embarrass them in 10 years time.
Hi Jake, it is very inspiring and informative. I immediately look up about 0% credit cards (to have extra cash for saving) and think how to optimise my existing mortgage (kicked me into action rather than just thinking about it after reading the news). Thank you and hope you and your family enjoy your new life! 🙂
@Mich (#70) – Thank you for your kind comment. I am glad my story could assist, hopefully you have been able to save a little more at the current higher interest rates.
Hey @jake
Would be good to have an update on how you are doing, and any changes to your position, family life, community and so forth 🙂 It’s been some time so would be brilliant to see how you are getting on.
Ryan
Hey @Ryan (#72) – It is great to hear from you, I hope you are keeping well.
Thank you for your interest in how we are doing. I can’t quite believe we will soon be at the end of our first year of FIRE. Below are a few of my thoughts thus far.
As this is our first year without a salary, I consider it a key barometer regarding our spending patterns and how it fits in with our expectations and forecasts. I have been trying to encourage myself to become more comfortable and flexible with our spending, especially on discretionary items. This is an intentional attempted shift in mindset as during the accumulation phase I probably would not have spent our money as freely. I don’t want to spend for the sake of it, but I am trying to gain a realistic picture of our true family spending going forward without lots of little self-imposed restrictions.
Sometimes I find myself taking a moment to appreciate our journey, where we have come from, to where we find ourselves currently. I still pinch myself and am grateful for our current situation.
It is very early days, and I am still experiencing a range of emotions when I take some time to ponder what we are doing. Uncertainty sometimes creeps into my thinking, when this happens, I try to keep a balanced perspective. Reminding myself to focus my attention on the present and enjoy the moment. This can sometimes be an internal battle which I hope will become easier to navigate as time passes.
I realised the other day that I had not thought about my last employer for a good few months. Hopefully the negative feelings that are normally stirred up are slowly fading now that I am no longer trapped in that world.
Financially our net worth is currently higher than it was at the beginning of the year.
If there is interest, I am happy to provide a more detailed update of our first year of FIRE at the beginning of next year.
Hi Jake,
Thank you for sharing your original story and this update. It has really opened my eyes to some of the possibilities. As I jumped back here from your comment on the latest Fireside chat I would say there is definitely interest in further updates!
Good luck and I hope it continues to go well.
Thanks so much for the update @jake
I am so pleased it’s going well. I agree with the comment above a more in-depth update would be appreciated.
I’m particularly interested in the dynamic with new friends/associates of children at school and whether you’ve let them a little closer as to your position in retirement.
I am in a similar position to you (not fully retired but sold my business and now work 2/3 hours a day) so it’s good to have someone to bounce off of a similar age. (37 here)
Thanks again!
Ryan
Really interesting to hear the approach taken to FIRE by Jake.
My family took FI 10 years ago, left the UK and setup shop in the South of France with two young kids in tow – reasoning was the cheaper living costs / price of housing….. and the weather.
What I find particularly interesting in the comments is the talk about de-accumulation / draw down. This is not an approach we considered. We made sure we had passive income from our investments (outside of pensions) and a small amount of earned income to cover our living costs. If a severe downturn in the markets occurs the idea is not to be a forced seller – risk adverse or overly safe hard to say. We use the Permanent Portfolio approach to ensure diversity of investment in our pensions.
We also invested to make sure our living costs were low (high efficiency wood heating system, insulation, solar panels etc. (the house was a ruin so we had to start from scratch). We grow some of our wood and some of our food. Holidays are easily driven to and our area is a holiday destination.
Recently I came across the work of Ramit Sethi – Rich life and the need to understand your money psychology. He had the fair point that life is for living not living a restricted lifestyle. FIRE, he highlights, can foster the saving habit to persist, stopping you living a fuller life….. This is something that we have discussed down the years are we missing out on something – what is really missing out?
Great post and comments – more to ponder!
@Jake very interesting to read – what most interested me is the “domestic arbitrage” – never heard it described that way ha! Do you have any links to resources regarding this as far as researching as I am trying to choose an area of the UK for the cost of living/resources/decent weather. I was thinking somewhere in the South East or South West and places like Plymouth have come up as cheap cost of living wise but seems difficult to find resources online to really compare various places.
I am currently executing FIRE and moved from London to Kuala Lumpur in Malaysia primarily for the cost of living but also weather too. Though I am planning ahead for after 10 years (I have a 10 year visa here).
Hello @Paul (#77) – Glad our domestic geo-arbitrage story was of interest to you.
I spent a lot of time researching on-line, for articles and comments, relating to relocating within the UK. If I remember correctly, I found an interesting series of newspaper articles, which focussed on different areas to live in the UK. Each area was visited and reviewed by the journalist. This was a good starting point for a broad overview. Unfortunately, I haven’t been able to find the exact articles I am referring to.
Once we narrowed down our search location. I was able to find more in-depth specific information, articles, comments. Which we used to come up with a short-list of potential areas. The final steps were visiting these areas, and then viewing properties.
Congratulations on reaching FIRE and the big move to Kuala Lumpur. How have you found your international geo-arbitrage move so far?
Do you think your investments will continue to grow enough to enable you to purchase a property on your return to the UK?
@Jake Thanks for the quick response! Definitely really interesting and domestic geo-arbitrage is not something I have seen talked about enough (or international for that matter). I personally think it’s the key aspect of enabling FIRE for many people that would not normally think they could do it – but of course especially international it takes a willingness to come out of your “comfort zone”. Any links or ways to look up what you found online comparing different locations would be great – so far all I have found is fairly vague whereas it would be great to get specific cost of living summary costs for certain locations as you can easily get for international locations to compare them. For instance noticed all the news recently on the “happiest places in the UK” which made me look up the number 1 woodbridge. Plymouth is one that keeps coming up as interesting for me and I was quite surprised that you can currently get a decent flat there for £100K or so that’s even right in the city centre. Makes absolute sense on the process you took.
Thankyou – I have found my international geo-arbritage overall great so far – there’s certain things I miss from the UK and other things I definitely do not miss! Ha. But that’s to be expected. For me I have lived in a lot of places across my life including 10 years in the US in my 20s so I am used to the global life – furthermore I worked in Kuala Lumpur for 2 years in the past which is what gave me the idea for this location as the perfect balance of “close to western lifestyle” but with massively cheap costs of living – people are astounded by my cost of living here and I feel I get a bit of a luxury life on top of it – aspects to it which would never be affordable in the UK for me such as living in a building with an amazing rooftop pool/gym and views, taking Ubers instead of public transport and eating out every week.
I do think my investments will grow enough to enable me to purchase a property in 10 years time – especially as it would be a small property though haven’t fully decided whether I would do it – I might only want to be in the UK for the summers so then I would have to think carefully about buying vs renting. I guess it’s something I will be researching and exploring the idea of over a number of years. After 10 years I might decide to move to another international location such as Mexico or Brazil or the Caribbean which also offer a good cost of living but with a bit more outgoing fun culture than Kuala Lumpur. A lot to think about but domestic arbitrage is certainly something to consider! Well done on achieving that!